TO WHAT EXTENT DO FISCAL REGIMES EQUALIZE OPPORTUNITIES FOR INCOME ACQUISITION AMONG CITIZENS? BY JOHN E. ROEMER, ROLF AABERGE, UGO COLOMBINO, JOHAN FRITZELL, STEPHEN P. JENKINS, ARNAUD LEFRANC, IVE MARX, MARIANNE PAGE, EVERT POMMER, JAVIER RUIZ-CASTILLO, MARIA JESUS SAN SEGUNDO, TORBEN TRANAES, ALAIN TRANNOY, GERT G. WAGNER, AND IGNACIO ZUBIRI COWLES FOUNDATION PAPER NO. 1139 COWLES FOUNDATION FOR RESEARCH IN ECONOMICS YALE UNIVERSITY Box 208281 New Haven, Connecticut 06520-8281 2006 http://cowles.econ.yale.edu/Journal of Public Economics 87 (2003) 539–565www.elsevier.com/locate/econbaseTo what extent do fiscal regimes equalize opportunitiesfor income acquisition among citizens?a, b c d*John E. Roemer , Rolf Aaberge , Ugo Colombino , Johan Fritzell ,efghStephen P. Jenkins , Arnaud Lefranc , Ive Marx , Marianne Page ,ij jEvert Pommer , Javier Ruiz-Castillo , Maria Jesus San Segundo ,kf lmTorben Tranaes , Alain Trannoy , Gert G. Wagner , Ignacio ZubiriaDepartment of Political Science,Yale University,PO Box208301,New Haven,CT06520,USAbStatistics Norway,Oslo,NorwaycUniversity of Turin,Turin,ItalydStockholm University,Stockholm,SwedeneUniversity of Essex,Essex,UKfUniversity of Cergy-Pontoise,Cergy-Pontoise,FrancegUniversity of Antwerp,Antwerp,BelgiumhUniversity of California,Davis,CA,USAiDutch Social and Cultural Planning Office,The Hague,The NetherlandsjUniversity Carlos III,Madrid,SpainkDanish National Institute of Social Research,Copenhagen,DenmarklGerman Institute for Economic Research(DIW Berlin),Berlin,GermanymUniversity of the Basque Country,Bilbao,SpainReceived 26 April 2000; received in revised form 13 February 2001; accepted 7 June 2001AbstractThis paper employs the theory of equality of opportunity, described in Roemer’s book(Equality of Opportunity, Harvard University Press, 1998), to compute the extent to whichtax-and-transfer regimes in 11 countries equalize opportunities among citizens for incomeacquisition. Roughly speaking, equality of opportunity for incomes has been achieved in acountry when it is the case that the distributions of post-fisc income are the same fordifferent types of citizen, where a citizen’s type is defined by the socio-economic status ofhis parents. Intuitively, a country will have equalized opportunity if the chances of earninghigh (or low) income are equal for citizens from all family backgrounds. Of course, pre-fiscincome distributions, by type, will not be identical, as long as the educational system does*Corresponding author. Tel.: 11-203-432-5249; fax: 11-203-432-6196.E-mail address:[email protected] (J.E. Roemer).0047-2727/01/$ – see front matter  2001 Elsevier Science B.V. All rights reserved.doi:10.1016/S0047-2727(01)00145-1540 J.E.Roemer et al./ Journal of Public Economics87 (2003) 539–565not entirely make up for the disadvantage that children, who come from poor families face,but the tax-and-transfer system can play a role in rectifying that inequality. We include, inour computation, two numbers that summarize the extent to which each country’s currentfiscal regime achieves equalization of opportunities for income, and the deadweight lossthat would be incurred by moving to the regime that does. 2001 Elsevier Science B.V. All rights reserved.Keywords:Fiscal regimes; Equal opportunities; Income acquisitionJEL classification:D63; H001. IntroductionIn this study we ask: To what extent do the tax-and-transfer regimes in 11advanced countries equalize opportunities, among their citizens, for incomeacquisition? We intend to subject an idea in contemporary political philosophy toeconomic analysis, and thereby to evaluate the performance of fiscal systems withrespect to one arguably important ethical measure.Many scholars have pondered, over the years, the justness or fairness oftaxation. A well-known tradition views taxation as an instrument to maximizeaverage utility in a society — this is the ‘utilitarian’ objective. A more recenttradition captures social welfare with a Rawlsian objective function: here, justtaxation is that which maximizes the welfare of the least well-off individual. Morerecently, political philosophers of an egalitarian stripe have criticized the Rawlsianview as ignoring the issue of personal responsibility. These writers (Dworkin,1981a,b; Arneson, 1989, 1990; Cohen, 1989; Roemer, 1993, 1998), to nameseveral, have argued that equality of outcomes, which the Rawlsian objectiveconsiders the ideal, is not ethically desirable, for it fails to recognize thatdifferences in outcomes due to differential efforts or ambitions by individuals are1ethically acceptable. What these writers propose is that egalitarians should seeknot to equalize outcomes, but only seek to equalize that part of outcomes whichare due, in Dworkin’s phrase, to ‘brute luck,’ which, roughly speaking, means tofactors for which the individual in question should not be held responsible,because they were beyond his control. In the terminology we adopt below, it isdesirable to equalize outcomes in so far as they are different because of the1We are here being, perhaps importantly, unfair to Rawls. For Rawls advocated the equality ofprimary goods, not outcomes. Nevertheless, in economic applications, most researchers have substi-tuted ‘utility’ or ‘income’ for Rawls’s ‘primary goods.’ In the former case, this move can be madeconsistent with Rawls by arguing that the utility function adopted by the researcher is really an index ofprimary goods (say, income and leisure).J.E.Roemer et al./ Journal of Public Economics87 (2003) 539–565541influence of differential circumstances, but not in so far as they are due todifferential effort. We call these theories, generically, equal-opportunity theories.Utilitarianism is a welfarist theory: to order two social alternatives (say, theoutcomes citizens enjoy under two different tax regimes), the utilitarian requiresknowledge only of the utilities of individuals under the two social alternatives.Similarly, the Rawlsian objective, as it is commonly used by economists, iswelfarist — one need only know the welfare (or some other outcome) of theworst-off individual under two alternatives to render a judgment of whichalternative is better. In contrast, equal-opportunity theories are non-welfarist: for torender a judgment about which social alternative is better, one need know theefforts expended by the individuals in the two alternatives, not simply theoutcomes